ISLAMABAD: The Asian Development Bank (ADB) has re-emerged as a funding contender for the $10 billion Karachi-Peshawar railway line (Main Line-1) mega project, amid delays in financing arrangements with China.
Planning Secretary Syed Zafar Ali Shah shared that the ADB had recently shown interest in financing the project. “As of now, we are still pursuing a part of the project with China,” he said.
In April 2017, Pakistan’s Planning Minister and focal person on CPEC, Ahsan Iqbal, had said the country refused part financing from the ADB for the ML-1 after China expressed interest to fund the project single-handedly. The estimated cost of the project at that time was $8bn.
The Chinese insistence
ADB had earlier been elbowed out of the project on the insistence of China. The country wanted to execute the project single-handedly as part of the multibillion-dollar CPEC.
The two governments, however, could not finalize the financing agreement for the project for almost six years. This left the 1,872km railway line project, considered as Pakistan’s logistic backbone, went through cost escalations. As well the CPEC itself ran into snags amid changing political environment.
As the project’s infrastructure deteriorated further with negligible maintenance and last year’s massive floods, the new government attempted to revive Main Line-1 in phases, starting with a $3.7bn first phase, mostly in Sindh.
Funding the Project
“China strongly argued that two-sourced financing would create problems and the project would suffer,” Mr Iqbal had said at a presser at the time, adding that Beijing wanted the project financing to be single-sourced. Under the original plan, the ADB had to provide $3.5bn for the railway line.
The minister had announced that the ADB would be accommodated in some other projects. He hinted at those under the Central Asian Regional Economic Cooperation Program.
The planning secretary said that the government had finalized an early-harvest program. Under it $1bn to $1.5bn will materialize during the current year out of $3bn flood-related funds. These funds are committed by the World Bank, the ADB, and the Asian Infrastructure Investment Bank (AIIB), among others.
He said the total funds committed by the development partners at January’s Geneva climate conference stood at $10.92bn.
Responding to a question, he explained that the $4.2bn announced by the Islamic Development Bank would include about $3.6bn in commodity financing in three years and $600 million in project financing. Details of the $1bn financing announced by Saudi Arabia had yet to be finalised, he said.
The $10.9bn funds would be available to Pakistan in three years, as it also had to finance almost half of the $16bn flood damages, he said, adding that the funds were coming from 13 different avenues.
The $3bn worth of projects had been approved and the development partners also cleared those for financing as well. He said the country had already repurposed and spent $300m on the flood-affected areas.
Post Disaster Needs Assessment & Proposed Cut in PSDP
The Post-Disaster Needs Assessment suggest that Sindh would get $8bn, Balochistan $2.5bn while Punjab and KP will get $750m each. The special regions will get $48m. The amount earmarked will be spent on housing and other infrastructure rebuilding in the flood-hit areas.
However, the planning secretary said the decision on a proposed cut in the current fiscal year’s PSDP remains.